Newspaper article THE JOURNAL RECORD

Fannie Mae Loan Ceiling Decreasing

Newspaper article THE JOURNAL RECORD

Fannie Mae Loan Ceiling Decreasing

Article excerpt

WASHINGTON (AP) - The ceiling on the size of single-family home loans purchased by the nation's largest secondary mortgage-market agency is declining by $150 to $187,450 next year, the first drop in at least a decade, the government said Tuesday.

Lenders usually charge interest rates a quarter- to a half-percentage point lower on mortgages they sell on the secondary market, compared with loans that exceed the limit.

The Federal National Mortgage Association (Fannie Mae) announced the drop in its limit based on October data collected by the Federal Housing Finance Board, which said the average home purchase price was $136,800 in the month, down from $136,900 a year earlier.

The Federal Home Loan Mortgage Corp. (Freddie Mac) uses the same formula to determine its ceiling but has not yet announced a change.

Together, the two congressionally chartered but publicly owned agencies help finance nearly one in four of the nation's residential mortgages. They purchase mortgages from lenders and repackage them into bond-like securities for investors.

Robert M. O'Toole, senior vice president at the Mortgage Bankers Association of America, a trade group, said Fannie Mae should have used its discretion and left the ceiling unchanged. …

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